Greenwich man faces federal charges in Madoff fraud

Updated 9:30 pm, Thursday, September 26, 2013

Photo: Larry Neumesiter, STF

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Paul Konigsberg, left, leaves court in New York with his lawyer, Reed Brodsky, Thursday, Sept. 26, 2013, after pleading not guilty to charges that he aided jailed financier Bernard Madoff in his Ponzi scheme. Prosecutors say that he directed false bookkeeping that enabled Madoff to fool thousands of investors while he squandered nearly $20 billion of their money. (AP Photo/Larry Neumeister) less

Paul Konigsberg, left, leaves court in New York with his lawyer, Reed Brodsky, Thursday, Sept. 26, 2013, after pleading not guilty to charges that he aided jailed financier Bernard Madoff in his Ponzi scheme. ... more

Photo: Larry Neumesiter, STF

Greenwich man faces federal charges in Madoff fraud

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A 77-year-old Greenwich accountant was arrested on Thursday by federal authorities on charges related to Bernard Madoff's massive Ponzi scheme.

Paul Konigsberg, was charged with five crimes in an indictment unsealed in federal court in New York City. Prosecutors said that Konigsberg was a senior tax partner at the accounting firm Konigsberg Wolf & Co. when he directed others to falsify records to conceal a fraud that cheated thousands of investors out of nearly $20 billion over decades.

Konigsberg entered a not-guilty plea and was freed on $2 million bail pending a court appearance Monday, the Associated Press reported.

A founding partner of Konigsberg Wolf & Co., a New York accounting firm that is now shuttered, Konigsberg had a close business relationship with Madoff dating to at least the 1980s, according to the Times. He was the only nonfamily shareholder in Madoff's London operation, which played a crucial role in transferring stolen money around the globe.

At the arraignment, Assistant U.S. Attorney Matthew Schwartz said Konigsberg was Madoff's "accountant of choice" with his most important clients, according to the AP.

The Securities and Exchange Commission filed additional charges against Konigsberg, alleging that he created false books and records while an accountant for Madoff. The SEC alleges that with Konigsberg's assistance, Madoff formed inaccurate trade confirmations and developed phony data documenting fabricated trades that were, in turn, falsely reflected in the ledgers and related books and records at Bernard L. Madoff Investment Securities.

According to the SEC's complaint filed in U.S. District Court for the Southern District of New York, Konigsberg aided and abetted the falsification of books and records at BMIS from at least the mid-1990s to late 2008.

"Konigsberg played a vital role in Madoff's deception of his oldest and wealthiest clients over many years," Andrew M. Calamari, director of the SEC's New York Regional Office, said in a statement. "Konigsberg's acquiescence, cooperation and collaboration were essential to the Madoff fraud."

Actual cash losses from the Madoff fraud are estimated at about $17.5 billion, but the paper wealth that was wiped out totaled more than $64 billion.

Konigsberg provided tax or accounting services for more than 200 BMIS client accounts, including five of Madoff's wealthiest and oldest clients who invested more than a billion dollars combined in BMIS, the SEC said.

Konigsberg received fees directly from BMIS clients for the accounting services that he provided them, the SEC alleged, and BMIS and Madoff paid him a monthly fee of $15,000 or $20,000 as a "retainer" for providing accounting services to a wealthy and longtime Madoff client, and his adult children.

Madoff, who is serving a 150-year prison sentence, has insisted that he acted alone. Yet Konigsberg is the 15th individual charged in the case.

On Oct. 7, five former employees of Bernard L. Madoff Investment Securities are scheduled to stand trial in U.S. District Court in Manhattan on charges they aided the fraud.

Irving Picard, court-appointed trustee for assets stolen by Madoff, has thus far recovered about $9.4 billion scammed by Madoff and continues to trace the victims' funds. He has filed more than 1,000 lawsuits, and the process of recouping losses is expected to carry on for years.